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When you are looking to use a subcontractor, you need a clear and well-drafted subcontractor agreement. There are a range of important things to include in a subcontractor agreement. Of course, the details will differ depending on the nature of the activities and what the subcontractor is assisting with. However, there are some aspects that are always important to at least consider.

This article will look at three key clauses to include in a subcontractor agreement. This includes outlining the scope of services, intellectual property and confidentiality clauses, and a dispute resolution clause. 

Scope of Services

Potentially the most important clause or set of clauses in a subcontractor agreement is the scope of services. The agreement should set out the tasks, what the subcontractor will be doing, where they will be doing it, and a timeframe. Of course, more detail is preferable to less detail. However, it will depend on the nature of your activity and how much specificity you can realistically expect. 

Achieving clarity and agreement on the scope of services is important for a range of reasons. First, it is a written record of what you have agreed (often verbally) with the subcontractor. This helps if there were any misunderstandings about what the parties agreed. Furthermore, one party may forget or misremember what agreement the parties made. This agreement also helps provide direction and clarity to the subcontractor about expectations around the services they will be providing. 

Finally, there may be a dispute with the subcontractor. Therefore, it will be important to have a clear scope of the services in a subcontractor agreement. 

Intellectual Property And Confidentiality Clauses

Other important clauses to consider are intellectual property and confidentiality clauses. An intellectual property clause will set out the proprietary rights over any materials or intellectual property the subcontractor may create or use in the course of their work. A confidentiality clause can protect your business from a subcontractor spreading commercially sensitive information, for instance, about your business’ processes. 

You should draft both kinds of clauses carefully and consider what you need to protect in your business. An intellectual property lawyer can be very helpful if you have intellectual property that requires protection.

Note: Intellectual property and confidentiality clauses tend to be underappreciated in the context of subcontractor agreements but are sometimes really important for protecting important proprietary information.

Dispute Resolution Clause

Despite the best of intentions from both parties, sometimes disputes can emerge with subcontractors. When this occurs, it is vital to have a well-drafted and clear dispute resolution clause in the subcontractor agreement that sets out exactly what should happen to resolve the dispute. It should also cover what happens if there is a dispute between your subcontractor and your client, as well as what happens in a dispute between you and the subcontractor.

You can shape a dispute resolution clause depending on what kind of resolution method you are most comfortable with. For instance, you could include in the clause a requirement for parties to go to mediation and have an independent third party assist in resolving the conflict in the event of a dispute. This process should be similar to the process outlined in your own contractor agreement with the client to ensure consistency. 

Key Takeaways

It is important to think carefully about how you draft your subcontractor agreement. A key clause includes one that sets out the scope of services your subcontractor will be providing. Indeed, additional detail is helpful in terms of clarifying expectations. Furthermore, in the event of a disagreement later you can examine expectations. Intellectual property and confidentiality clauses can also be really important to protect your business’ interests and intellectual property in particular. Finally, a dispute resolution clause is vital even with subcontractors you have worked with many times, to set out a clear process in the event of disagreement.

If you would like more information about what to include in a subcontractor agreement, contact LegalVision’s commercial lawyers on 0800 005 570 or complete the form on this page.

Frequently Asked Questions

What should a subcontractor agreement cover in terms of the scope of services?

The more detail about the scope of services, the better. The agreement should set out what work will be completed, details about the performance of that work if relevant, where the work will be performed and a timeframe for completion. 

Why is a confidentiality clause important for subcontractors?

In the event subcontractors can access commercially sensitive or other important information in the course of their work, a confidentiality clause can protect that information from being spread.

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